Using membership fees to increase customer loyalty

Reports on a preliminary study which examined the impact of membership fees on consumer attitude and choice. Consumers participated in a computerized simulated shopping experiment in which repetitive choices were made from a set of videotape rental stores. Paying a membership fee had a short-term impact on attitudes and choice. It is suggested that it is often a wise practice for retailers to build membership fees (even very small ones) into their pricing structure. Paying such a fee appears to make consumers resistant to the offers of competitors in the short run and may provide some insulation from competitive attacks.